Many Americans are locked out of homeownership after years of high borrowing costs and rising prices. In 2026, however economist say conditions may begin to change, according to a report by CNN.
Next year, many economists are optimistic about the housing market and many anticipate that rising incomes will start to outpace home prices, making homes feel more affordable for many Americans, CNN said.
According to CNN, Redfin has called 2026 “The Great Housing Reset,” while Compass has described it as the start of a “new era.”
Volumes have been historically low for years, and CNN said that even a small increase in activity would mark a turning point for the housing market. The shift would come as the Trump administration said it intends to prioritize housing affordability next year, although details of those plans remain limited.
The past few years, the housing market has appeared to be stuck, said Mike Simonsen, the Chief Economist at Compass. Fewer homes changed hands, but home prices kept climbing.
Home Sales Could Tick Upward
“In the next era, we’ll have sufficient inventory on the market across the country, allowing sales to increase,” he said, predicting that the number of home sales would finally tick upward in 2026.
That might happen for a number of reasons – but CNN said that government reform probably isn’t one of them.
Home prices have exploded since the pandemic, as demand for homes outgrew supply, pricing many Americans out of the market. Between the start of 2020 and the third quarter of 2025, home prices climbed nearly 55% nationwide, according to a recent report from the National Association of Homebuilders.
Beyond the general lack of housing already, CNN said that many sellers are unwilling to give up the ultra-low mortgage rates they locked in years ago, and have held off on listing.
As homeowners adjust to rates above 6%, more may choose to sell in 2026, adding inventory to the market and easing price pressure, Simonsen said.
In 2025, CNN said there were glimmers of affordability, with some states such as Florida, Texas, and California seeing average home prices decline from their peaks.
One Key is to Build More Homes
But Simonsen said, don’t expect a sharp nationwide drop in home prices in 2026. He said that prices are more likely will hover near current levels.
“We’re forecasting a half a percent increase in home prices next year, which is essentially flat,” he said.
Many buyers still may feel priced out next year and Simonsen said the best way to make homes more affordable long term would be to build more homes.
In terms of homebuilding, Simonsen said “we are behind.”
Mortgage rates have trended lower in the second half of 2025, CNN said. Last week, the average 30-year fixed-rate mortgage was 6.18%, significantly lower than at the start of 2025, when rates were nearing 7%.
Simonsen said he expects mortgage rates to stay above 6% in 2026, but that could change.
Falling inflation or a weakening labor market could prompt the Federal Reserve to cut rates more than expected, CNN said. While mortgage rates don’t follow the Fed directly, they track the 10-year Treasury yield, which reacts to the Fed’s moves.
Jason Waugh, President of Coldwell Banker Affiliates, said consumer confidence is key to the housing market. If the labor market further soften and buyers feel less secure in their jobs, they may be less willing to buy a home, weighing on sales.
“For the majority of folks, (buying a house) is a 15-year or a 30-year commitment,” he said. “If you’re not confident in your income stream or your income potential, you may pause and not take on larger commitments.”
A few years ago, rent prices exploded in many cities and renters got a little relief in 2025 as rent growth cooled, according to Bank of America.
Rents were flat year-over-year in October for the first time in three and a half years, according to the bank’s internal payments data.
Rental Demand Could Stay Elevated
Will that relief last? Maybe not, CNN said.
With many Americans still locked out of homeownership by high down payments and expensive monthly mortgage payments, Redfin estimates rental demand will stay elevated, even as fewer newly constructed apartments hit the market. Rents could rise by about 2% to 3% year over year by the end of 2026, according to Redfin.
Earlier in December, President Donald Trump teased plans to pursue the “most aggressive housing reform plans” in U.S. history next year, CNN said.
The White House so far has been quiet about details, National Economic Council Director Kevin Hassett suggested plans focused on housing regulations during a television appearance last week.
“There are a lot of things that we can do with regulations to try to help get stuff approved quicker,” he said on Fox Business. “And we can also do things like reward states that make it easier for people to build a new home.”
In a statement to CNN, White House spokesperson Kush Desai said that homeownership was a “top priority for President Trump’s affordability agenda.”
